ALEXANDRIA, Va., Nov 09, 2005 /PRNewswire-FirstCall via COMTEX News Network/ -- USA Mobility, Inc. (Nasdaq: USMO), a leading provider of wireless messaging services, today announced operating results for the third quarter ended September 30, 2005 and a special dividend of $1.50 per share payable in December. USA Mobility was formed on November 16, 2004 by the merger of Arch Wireless, Inc. and Metrocall Holdings, Inc. USA Mobility's historical financials are those of Arch Wireless, which was deemed the accounting acquirer in the merger.
Reported revenue for the third quarter of 2005 was $152.0 million, compared to $109.4 million in the third quarter of 2004, with the increase due entirely to the inclusion of Metrocall revenue for the quarter ended September 30, 2005. Third quarter revenue decreased 3.5% from $157.5 million reported for the second quarter of 2005.
Reported net income for the third quarter was $355,000, or $0.01 per fully diluted share, compared to net income of $6.7 million, or $0.34 per fully diluted share, in the third quarter of 2004.
USA Mobility reported a reduction of 232,000 units in service in the third quarter. Units in service totaled 5,116,000 at September 30, 2005, with 4,342,000 direct units in service and 774,000 indirect units in service. One- way units in service at the end of the third quarter totaled 4,662,000 while two-way units in service totaled 454,000. Average revenue per unit for the quarter was $9.04, with revenue per direct unit in service of $9.81 and revenue per indirect unit in service of $4.81.
"We continue to see positive trends in the rate of unit and revenue decline," said Vincent D. Kelly, president and chief executive officer. "Unit losses of 232,000 during the third quarter compared to 272,000 during the second quarter, 347,000 in the first quarter and 388,000 in the fourth quarter of 2004 (reflecting the inclusion of Metrocall for the entire quarter). This is an improvement in the sequential rate of decline from 6.1% to 5.8% to 4.8% to 4.3% over the past four quarters. In addition," Kelly noted, "third quarter revenue declined 3.5% compared to a decrease of 4.9% in the second quarter. Although current trends do not predict future results, we are very encouraged by these quarterly results."
Kelly also noted that USA Mobility made significant progress during the quarter toward completing its merger integration goals. Key achievements included further consolidation of the company's operating and management structure, repositioning of the company's sales and marketing strategy, and making substantial progress in network rationalization, including the decommissioning of the Arch two-way network and most notably a long-term master site lease agreement with Global Signal, Inc. that is expected to greatly reduce USA Mobility's network costs. "We have spent the first half of the year integrating the operations of the two companies in order to create a low cost operating platform with which to service our customers and generate cash flow. More recently we have focused on longer-term strategic initiatives on both the revenue and cost side of our business. While we cannot share every detail of our plans with you for competitive and other reasons, we look forward to providing more information at an investor meeting we plan to host in the first quarter of 2006 in New York City. We will provide the exact date and details of the meeting in the coming months."
Thomas L. Schilling, chief financial officer, said the company continued to improve its financial position in the third quarter. "During the quarter we repaid the remaining $26.5 million balance on our bank credit facility, resulting in a debt free balance sheet and enhanced financial flexibility," he said. "In addition, our cash balance at September 30th was $43.3 million."
Kelly added: "As a result of our current and projected cash position at year end, our Board of Directors has declared a special one-time dividend of $1.50 per common share, to be paid on December 21, 2005 to shareholders of record on December 1, 2005." Kelly said the Board has made no determination on future uses of cash beyond the one-time dividend, "but we will regularly evaluate our options for returning capital to shareholders based on the company's operating performance and future capital investment requirements."
Among other highlights of the third quarter, Kelly noted, was the company's outstanding performance in the immediate aftermath of Hurricanes Katrina, Rita and Wilma. "Due to the reliability of our networks as compared to competing wireless services, plus the preparedness of our technical and customer support teams in the field, we were able to provide one-way and two- way paging and text-messaging services when most other wireless networks had not yet been restored," Kelly said. "As a result, hundreds of emergency service responders -- including hospitals, utilities, police, firefighters and government agencies -- were able to maintain critical communications. We also supplied thousands of additional pagers to federal, state and local emergency response organizations to help respond to the crisis. While these disasters were devastating for those affected," Kelly added, "we were pleased to do our part."
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USA Mobility plans to host a conference call for investors on its third quarter results at 11:00 a.m. Eastern Time on Thursday, November 10, 2005. The call-in number is 866-802-6730 (toll-free) or 913-643-4200 (toll). The pass code for the call is 3544544 (followed by the # sign). A replay of the call will be available from 3:00 p.m. Eastern Time on November 10 until 11:59 p.m. Eastern Time on Wednesday, November 23. The replay number is 888-203- 1112 (toll-free) or 719-457-0820 (toll). The pass code for the replay is 3544544 (followed by the # sign).
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About USA Mobility
USA Mobility, Inc., headquartered in Alexandria, Virginia, is a leading provider of paging products and other wireless services to the business, government, healthcare and emergency response sectors. USA Mobility offers traditional one-way and advanced two-way paging via its nationwide networks covering more than 90% of the U.S. population. In addition, the company offers mobile voice and data services through Nextel, Sprint and Cingular/AT&T Wireless, including BlackBerry and GPS location applications. The company's product offerings include wireless connectivity systems for medical, business, government and other campus environments. USA Mobility focuses on the business-to-business marketplace and supplies mobile connectivity solutions to over two-thirds of the Fortune 1000 companies. For further information visit http://www.usamobility.com.
Safe Harbor Statement under the Private Securities Litigation Reform Act: Statements contained herein or in prior press releases which are not historical fact, such as statements regarding USA Mobility's expectations for future operating and financial performance, are forward-looking statements for purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve risks and uncertainties that may cause USA Mobility's actual results to be materially different from the future results expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially from those expectations include, but are not limited to, declining demand for paging products and services, the ability to continue to reduce operating expenses, future capital needs, competitive pricing pressures, competition from both traditional paging services and other wireless communications services, government regulation, reliance upon third-party providers for certain equipment and services, the timely and efficient integration of the operations and facilities of Metrocall and Arch as well as other risks described from time to time in periodic reports and registration statements filed with the Securities and Exchange Commission. Although USA Mobility believes the expectations reflected in the forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectations will be attained. USA Mobility disclaims any intent or obligation to update any forward-looking statements.
Contact: Bob Lougee (703) 721-3080 Tables to Follow USA MOBILITY, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) December 31, 2004 September 30, 2005 (Unaudited) ASSETS Current assets: Cash and cash equivalents $46,995 $43,323 Accounts receivable, net 37,750 43,424 Prepaid rent, expenses and other 15,460 13,823 Deferred income tax assets 26,906 26,309 Total current assets $127,111 $126,879 Property and equipment, net 216,508 155,853 Goodwill 151,791 148,799 Intangible assets, net 67,129 45,631 Deferred income tax assets 225,253 216,109 Other assets 5,517 4,815 TOTAL ASSETS $793,309 $698,086 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current maturities of long-term debt $47,558 $14 Accounts payable and other accrued liabilities 76,420 76,152 Customer deposits 4,316 3,427 Deferred revenue 23,623 19,929 Total current liabilities $151,917 $99,522 Long-term debt, less current maturities 47,500 - Other long-term liabilities 10,555 12,276 TOTAL LIABILITIES $209,972 $111,798 Stockholders' equity: Preferred stock - - Common stock 3 3 Additional paid-in capital 554,946 558,898 Retained earnings 28,388 27,387 TOTAL STOCKHOLDERS' EQUITY 583,337 586,288 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $793,309 $698,086 USA MOBILITY, INC. CONDENSED CONSOLIDATED RESULTS OF OPERATIONS (unaudited and in thousands, except share and per share amounts) Three Months Ended Nine Months Ended September 30, September 30, 2004 2005 2004 2005 Revenue: Service, rental and maintenance, net of service credits $104,785 $145,014 $335,505 $455,647 Product sales 4,632 6,940 13,368 19,521 Total revenue 109,417 151,954 348,873 475,168 Operating expenses: Cost of products sold 691 945 2,485 3,153 Service, rental and maintenance 36,904 54,607 112,880 167,685 Selling and marketing 7,862 11,276 25,687 32,834 General and administrative 27,438 44,783 87,523 140,405 Depreciation and amortization 22,302 27,327 79,682 98,751 Stock based compensation 1,865 76 6,185 2,155 Severance and related termination costs 1,228 1,050 5,374 16,026 Total operating expenses 98,290 140,064 319,816 461,009 Operating income 11,127 11,890 29,057 14,159 Interest expense, net 71 (18) (4,958) (1,731) Loss on extinguishment of long-term debt - (312) - (1,338) Other income, net 66 76 411 297 Income (loss) before income tax expense 11,264 11,636 24,510 11,387 Income tax expense (4,527) (11,281) (9,852) (12,388) Net income (loss) $6,737 $355 $14,658 ($1,001) Basic net income (loss) per common share $0.34 $0.01 $0.73 ($0.04) Diluted net income (loss) per common share $0.34 $0.01 $0.73 ($0.04) Basic weighted average common shares outstanding 19,914,099 27,365,701 19,967,708 27,234,214 Diluted weighted average common shares outstanding 20,041,555 27,411,639 20,091,801 27,234,214 USA MOBILITY, INC. CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (unaudited and in thousands) Nine Months Ended September 30, 2004 2005 Cash flows from operating activities: Net income (loss) $14,658 ($1,001) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 79,682 98,751 Amortization of deferred financing costs - 714 Amortization of stock based compensation 2,065 2,155 Income tax expense 9,852 12,388 Loss on extinguishment of long-term debt - 1,338 Gain on disposals of property and equipment (240) (30) Provisions for doubtful accounts, service credits and other 7,349 17,221 Changes in assets and liabilities: Accounts receivable (2,452) (23,154) Prepaid expenses and other (5,182) 2,039 Intangibles and other long-term assets - 2,911 Accounts payable and accrued expenses (16,427) (2,692) Customer deposits and deferred revenue (6,081) (4,583) Other long-term liabilities 4,083 (5,768) Net cash provided by operating activities $87,307 $100,289 Cash flows from investing activities: Purchases of property and equipment (15,328) (9,515) Proceeds from disposals of property and equipment 1,675 259 Receipts from note receivable 168 259 Net cash used for investing activities ($13,485) ($8,997) Cash flows from financing activities: Repayment of long-term debt (60,000) (95,044) Proceeds from exercise of options - 80 Purchase of treasury shares (3,112) - Net cash used for financing activities ($63,112) ($94,964) Net decrease in cash and cash equivalents $10,710 ($3,672) Cash and cash equivalents, beginning of period 34,582 46,995 Cash and cash equivalents, end of period $45,292 $43,323 Supplemental disclosure: Interest paid $6,709 $2,210 State income taxes paid $0 $465 USA MOBILITY, INC. PRO FORMA AND ADJUSTED UNITS IN SERVICE ACTIVITY (a) (b) units in thousands (unaudited) Three Months Ended March 2004 June 2004 Direct One-Way: Beginning units in service 5,329 5,100 Gross placements 226 181 Disconnects (455) (372) Ending units in service 5,100 4,909 Two-Way: Beginning units in service 506 483 Gross placements 40 32 Disconnects (63) (53) Ending units in service 483 462 Indirect One-Way: Beginning units in service 1,716 1,474 Gross placements 157 145 Disconnects (399) (366) Ending units in service 1,474 1,253 Two-Way: Beginning units in service 131 123 Gross placements 20 16 Disconnects (28) (18) Ending units in service 123 121 Total Beginning units in service 7,682 7,180 Gross placements 443 374 Disconnects (945) (809) Ending units in service 7,180 6,745 Adjusted Proforma ARPU Direct One-Way $9.10 $8.96 Direct Two-Way $25.15 $24.68 Indirect One-Way $4.06 $4.26 Indirect Two-Way $12.89 $12.07 Total $9.15 $9.16 Three Months Ended September 2004 December 2004 Direct One-Way: Beginning units in service 4,909 4,690 Gross placements 182 166 Disconnects (401) (392) Ending units in service 4,690 4,464 Two-Way: Beginning units in service 462 449 Gross placements 35 29 Disconnects (48) (56) Ending units in service 449 422 Indirect One-Way: Beginning units in service 1,253 1,101 Gross placements 160 143 Disconnects (312) (257) Ending units in service 1,101 987 Two-Way: Beginning units in service 121 115 Gross placements 20 7 Disconnects (26) (28) Ending units in service 115 94 Total Beginning units in service 6,745 6,355 Gross placements 397 345 Disconnects (787) (733) Ending units in service 6,355 5,967 Adjusted Proforma ARPU Direct One-Way $8.89 $8.75 Direct Two-Way $24.22 $23.93 Indirect One-Way $4.12 $4.26 Indirect Two-Way $11.30 $10.41 Total $9.14 $9.09 Three Months Ended March June September 2005 2005 2005 Direct One-Way: Beginning units in service 4,464 4,273 4,114 Gross placements 141 134 125 Disconnects (332) (293) (262) Ending units in service 4,273 4,114 3,977 Two-Way: Beginning units in service 422 397 382 Gross placements 22 29 17 Disconnects (47) (44) (34) Ending units in service 397 382 365 Indirect One-Way: Beginning units in service 987 859 762 Gross placements 107 92 26 Disconnects (235) (189) (103) Ending units in service 859 762 685 Two-Way: Beginning units in service 94 91 90 Gross placements 7 7 3 Disconnects (10) (8) (4) Ending units in service 91 90 89 Total Beginning units in service 5,967 5,620 5,348 Gross placements 277 262 171 Disconnects (624) (534) (403) Ending units in service 5,620 5,348 5,116 Adjusted Proforma ARPU Direct One-Way $8.65 $8.61 $8.48 Direct Two-Way $23.98 $23.65 $24.28 Indirect One-Way $4.07 $4.11 $4.36 Indirect Two-Way $9.16 $8.71 $8.42 Total $9.01 $9.02 $9.04 (a) Assumes Arch and Metrocall combined as of January 1, 2004 and the unit in service adjustment reflected in March 2004. (b) Amounts have been adjusted for rounding.
SOURCE USA Mobility, Inc.
Bob Lougee for USA Mobility, Inc., +1-703-721-3080